Guide to Investing in US Real Estate As A Foreigner
As a foreigner investing in US real estate, you may want to know about the property market’s growth during the COVID-19 lockdowns.
The good news is that market-oriented investments in construction and rental residential property have grown.
Many of us find it hard to think foreigners invested in US properties when the coronavirus pandemic brought retail giants to their knees.
And shuttered thousands of retail stores, restaurants, and gyms.
While the hardest hit sector is international tourism, with deserted hotels to empty airports, retail and office sectors also suffered lost rentals.
As office workers started working remotely and from home, residential and multifamily people took advantage of the incredible run-up in the market.
With tenants on a waitlist, landlords are driving a hard bargain on the renewal of leases.
Foreign investors know that the US’s demand for investment real estate will continue to rise for quite some time.
Chapter 1: Goals of US Real Estate Investment Guide
Chapter 2: Why Invest in Real Estate and Where to Invest
Chapter 3: Can foreigners own US real estate?
Chapter 4: A Guide to Setting Up Your Business Structure
Chapter 5: Residential Real Estate Investing
Chapter 6: Co-investment
Chapter 7: Corporate Taxes
Investing in US Real Estate With Noble Sky International
With this, let’s start with some background on how this US Real Estate Investment Guide came about.
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Background of US Real Estate
Since 2014, Noble Sky International has seen the opportunity possible in US real estate investing.
We have worked with foreign investors from Asia and helped buy US real estate for cash flow income purposes.
With our strategies, we have encouraged investors from Asia and worldwide to build a successful portfolio of investment properties by purchasing and selling homes in the United States.
Our clients differ from first-time investors, working adults, and retirees to high-net-worth individuals.
We provide comprehensive real estate information for new investors or seasoned real estate professionals.
Noble Sky effectively helps Asian investors who wish to successfully penetrate the US property market.
As of 2021, we have over 300 investors and handle over 170 companies and 60 properties for our clients.
Noble Sky International – Our Expertise
Our competency is in buying well-researched properties with the maximum revenue potential AND purchasing at a considerable discount to the market price.
When we gain properties at a discount upfront, our investors immediately enjoy Capital Gains instead of waiting for future profits.
THE BIGGEST RULE OF REAL ESTATE INVESTING: You make money when you BUY, not when you SELL.
What Is The Value Of Residential US Real Estate?
After a record-setting year of home sales in 2020, the housing market still shows no sign of cooling off.
According to Zillow, the typical home value of homes in the United States is $298,933 – the value adjusted every season. It mainly includes the middle price tier of single-family houses.
The US home values have gone up 16.7% over the past year.
Zillow predicts the cost of a typical home will rise by 12.1% in the next year.
How Big Is The Residential US Real Estate?
According to another Zillow analysis, the total stock of US housing is now worth $36.2 trillion.
With only 63% of Americans owning real estate, there’s 37% or $13.394 trillion worth of property for rental.
What Is Noble Sky’s US Real Estate Investment Guide as A Foreigner?
Our goal for this Real Estate Investment Guide is to provide fundamental knowledge of investing as a foreigner.
We want to empower real estate investors to make an informed decision to achieve their financial goals via property investing.
An investment property is far more comprehensive than buying your own home – Investing in US Real Estate as a foreigner is one of the best ways to grow your wealth.
The guide focuses on several strategies Noble Sky uses to grow a real estate portfolio and, ultimately, wealth for our investors.
What You Will Not Be Investing In?
The US Real Estate Investment Guide focuses on several strategies Noble Sky uses to grow a real estate portfolio and, ultimately, wealth for our investors.
You will not be investing in
- Real Estate Investment Trusts (REITs)
- Real Estate Related Equity Stocks
- Crowdfunded Real Estate Deals
Publicly-traded Real Estate Investment Trusts (REITs) own, operate, and finance income-producing real estate across various property sectors.
Most REITs trade on major stock exchanges and offer several benefits to investors.
Noble Sky International’s core business model assists investors in setting up a business structure to invest in physical properties in the United States of America.
Many of us know properties and real estate are the go-to investments to establish long-term intergenerational wealth.
Noble Sky International commits to a clear, jargon-free explanation of critical concepts and investment strategies you can use on your own.
Chapter 1: Goals of US Real Estate Investment Guide
The goal of investing is to put your money to work harder today to have more money in the future.
The returns or profits from your investments must be more than enough to cover the risk you take and your taxes.
Unlike other investments, there are ancillary costs of owning a property.
You need to factor in property taxes and insurance on top of utilities and maintenance costs.
Real estate investing is pretty straightforward once you understand investment fundamentals, economics, and risk.
- You buy properties
- Earn money through rent and capital appreciation
- Buy even more properties
You rinse and repeat the cycle to grow your nest egg.
Keep in mind that “simple” doesn’t mean “easy.”
If you overleverage by taking more bank loans than you can service, the consequences can lead to bankruptcy.
Four Ways To Make Money by Investing in Real Estate
When you invest in real estate, there are four major ways you can make money:
- Cash Flow Income
- Real Estate Appreciation
- Real Estate-Related Income
- Ancillary Real Estate Investment Income
Capital Appreciation In Real Estate
First up is simply a capital appreciation of a home’s value.
Passive appreciation is the overall value of homes increases at a rate in line with inflation (around 3-5%)
When you or if a new shopping center were to be built nearby, the value changes.
Real estate appreciation is difficult to predict, as home values fluctuate significantly.
Forced appreciation happens when an investor upgrades the property to make it more attractive to buyers.
Property upgrades include additional bedrooms, a bath, or new kitchen fittings.
With these, sell it at a higher value.
You can raise rents and lower operating expenses for apartment buildings, thus increasing the building’s value.
Capital appreciation is calculated and presented in a percentage on an annual or Year-on-Year basis.
Cash Flow Income
A Positive Cash Flow is your game-changers on the worldwide property stage.
The two things that create favorable cash flow conditions are Low Prices and No Debt.
Remember, it is relatively easy for foreigners to own US rental property and have a positive monthly cash surplus.
A positive Cash Flow Income is the surplus from the rental income after you pay off monthly expenses.
American investors often take for granted the potential for cash flow from their highly leveraged real estate assets.
As a foreign investor, you can start with residential properties.
A single-family home is an excellent way to start building a Cash Flow Income.
You can build a profitable portfolio with several rental homes in due time.
Once your business is up and running, you can expand your portfolio to more significant assets.
Operate an apartment rental, a retail establishment of even storage units for more Cash Flow Income.
In Asian markets, investors settle for minimal cash flow or even negative cash flow.
For example, if you collect $5,000 in rent each month and your expenses are $4,000, it means a positive cash flow of $1,000 – your monthly income.
With a deficit, you have negative cash flow.
Investors in cities like Singapore, Jakarta, Kuala Lumpur, and even Penang sometimes expect a negative cash flow instead of making profits.
In these Asian cities, condos remain vacant, or the rental does not cover the mortgage.
Investment properties in the USA generate cash flow and appreciation and have a high potential for foreign demand.
Most beginner investors think about these two categories for real estate investing.
But as you’re about to see, there are another two categories!
Real Estate-Related Income
Real estate specialists, agents, brokers, or wholesalers, earn a commission on properties they helped clients buy or sell.
Real estate management companies often charge a percentage fee for managing properties and their day-to-day operations.
For instance, a hotel management company gets to keep 15% of a hotel’s sales.
The fees are for hiring and managing the front desk, housekeeping, cleaning, and maintenance.
Ancillary Real Estate Investment Income
Ancillary real estate investment income can be an enormous source of profit.
The income involves mini-businesses within a more extensive real estate investment with a semi-captive collection of customers.
Some ideas for additional sources of income include installing food and drinks vending machines for office buildings.
For Rental Apartments, you can manage a mini-mart and laundry room.
Chapter 2: Why Invest in Real Estate and Where to Invest
Investing in your first investment property in the United States is exciting.
It marks the start of a new chapter for you as a foreign investor investing in the US.
However, the things you need to consider may differ from how things are done are in your country.
Location, price, and investment capitals are the key factors to consider.
There are five major types of real estate investment:
- Residential
- Commercial
- Retail
- Industrial
- Real Estate Investment Trusts (REITs)
Once you appreciate the Property Investment In the US, you are ready to become a successful property investor.
With Noble Sky International, our strategy for beginners is to invest in residential real estate.
Are you ready to make your next property investment to earn from them?
What Is Real Estate Investing?
Real estate investing allows you to earn a consistent income, and capital appreciation and diversify an investment portfolio.
Many savvy investors use US real estate to build wealth.
Those who diversify a portion of their portfolio in real estate investments have historically outperformed those who haven’t.
What Are The Benefits Of Investing In US Real Estate?
Real estate features a unique combination of short-term and long-term earning potential.
The diversification power is not found in other asset classes.
What does real estate offer that stocks and bonds don’t?
Real estate investments typically complement portfolios heavily allocated to stocks and bonds.
Their distinct characteristics can bring advantages not found in the stock market.
What Are The Options To Invest In Real Estate?
Investment options are divided into two categories: active (hands-on) and passive (hands-off). Each approach has distinct advantages and disadvantages.
What is the best investment strategy?
Property investment is an investment in land, an increasingly rare resource similar to gold and silver; they don’t make land anymore.
On its own, real estate is a suitable vehicle as a hedge against inflation.
Real estate investing offers competitive risk-adjusted returns and builds equity and cash flow.
It also provides tax breaks to savvy investors.
Real estate can also enhance a portfolio by reducing volatility through diversification by investing in physical properties.
Even if you are an investor with limited capital, Noble Sky International has a strategy for you to start investing.
What Is The Ideal Investment Property In The United States?
Our strategy for beginner real estate investors is to invest in residential single-family homes in the cities.
Property class is the first category in the three-tiered categorization system used by the real estate industry.
It is further subdivided into property type and style.
Each property class represents a different level of reward and risk for the Investor.
Unlike in Asia, Americans’ ideal investment property type is a single-family home.
Seventy percent of the population live in such a property instead of condos and apartment blocks.
Class A provides investors with the security of investing in top-tier properties in the top school districts.
However, these investments are costly.
Let’s look at property class.
What is Class A, Class B, or Class C property?
A common question from our investors is, which property class do we go for?
A property’s rating determines the quality of the home.
Each property class presents a different level of return and risk to the Investor.
The properties are classified according to a combination of location and physical attributes.
The top of the list includes the property’s age, tenant income levels, growth prospects, appreciation, amenities, and rental income.
Investors use these differences to evaluate how each property fits against its projected return objectives.
They also consider the amount of risk to accept to generate those returns.
Class A
Class A buildings are newer properties built in the last 15 years.
These come with top amenities and are occupied by high-income-earning tenants.
The vacancy rate is low.
These are well-located, professionally managed, and command the highest rent with minor or zero deferred maintenance issues.
Expensive to acquire and costly to maintain, but it yields the highest profits.
Class B
Rental income for Class B is lower with some deferred maintenance issues, lower-income tenants, and is not professionally maintained.
Many investors view Class B properties as an excellent business opportunity to upgrade with “value-add” improvements to common areas.
Class C
Class C properties are above 20 years old.
The location is less than desirable.
Some Class C distressed properties need major upgrading works to get to steady cash flow income for investors.
As a result, Class C buildings have the lowest rental rates in the market.
Class D
Likewise, give the D Grade homes built with lower-quality materials a miss.
Class A has the highest purchase price, so investors’ initial cash flow is the lowest.
Class B has room for area improvement if you’re an investor after a value-added approach.
You may even upgrade it to Class A.
Class C will likely need some elbow grease to reposition to get a steady cash flow income.
D Class is a great buy for repositioning or if you think the location’s quality is improving.
It is easier to improve a single building rather than the entire street or neighborhood.
Chapter 3: Can foreigners own US real estate?
The United States is one of the most welcoming countries to foreign investors.
Anyone may buy and own property in the United States, regardless of citizenship.
You can be a Non-U.S. citizen and a foreigner to purchase and own a home in the US.
No laws or restrictions prevent an individual from any foreign citizenship.
Buying property in the US as a foreigner has advantages, like a stable market, flexible financing options, and tax benefits.
According to the National Association of Realtors, international investors refer to two types.
- Non-resident foreigners (Type A): Non-U.S. citizens with permanent residences outside the US.
- Resident foreigners (Type B): Non-U.S. citizens who are recent immigrants or non-immigrant visa holders who live for over six months in the US for professional, educational, or other reasons.
The Top 5 US Real Estate Foreign Buyers
In 2019, foreign buyers bought $148 billion of US residential real estate.
Since March 2021, residential sales to foreign and non-citizens buyers have totaled $74 billion.
The decline in Chinese investment saw 5% less in US housing sales.
However, foreign buyers still play a significant role in Florida and California US housing markets.
Their purchasing power help drives new development sales in big cities like Miami and New York.
The National Association of Realtors lists the Top 5 US Real Estate Foreign Buyers below.
An Asian Property Buyer Guide To The US Real Estate Investment Markets
Some questions investors ask include which are the real estate markets to focus on as a non-citizen.
If you’re thinking of investing, the prominent cities on the West and East Coast come quickly to mind.
Los Angeles, CA
Los Angeles has the most expensive neighborhoods on the Santa Monica Mountains’ ridges and the Pacific Ocean’s shores.
Major hillside areas are Beverly Hills, Bel Air, and Brentwood.
The coastal areas of Santa Monica, Venice, and Malibu contain expensive luxury homes.
Malibu takes the prize for the most exclusive enclaves.
New York City, NY
New York City is one of the most famous cities in the world.
The ‘Big Apple’ is home to exclusive shops, flashy Broadway performances, and infamously expensive apartments.
The latest listing is a $169 million penthouse at 432 Park Avenue on “Billionaire’s Row.”
NYC is a vibrant city that has long captivated high-flying business tycoons and investors worldwide.
As a foreign investor, you can take advantage of the smaller secondary markets in the US.
They group real estate markets in the United States into three baskets.
Primary markets are the largest, secondary markets are the mid-sized real estate markets, and tertiary markets are less populated.
While there aren’t any specific criteria: What a secondary market means to you as a real estate investor is more important.
The Ten Largest Cities In The United States By Population 2021
New York City has the highest population density of any major city in the United States.
There are over 3 million foreign-born residents.
With over 27,000 people per square mile, nearly 2 million New Yorkers are under 18.
It is a very vibrant and expensive city to work and live in.
Here is a list of the top ten most populated cities in the US as of 2020:
- New York City, NY (Population: 8,622,357)
- Los Angeles, CA (Population: 4,085,014)
- Chicago, IL (Population: 2,670,406)
- Houston, TX (Population: 2,378,146)
- Phoenix, AZ (Population: 1,743,469)
- Philadelphia, PA (Population: 1,590,402)
- San Antonio, TX (Population: 1,579,504)
- San Diego, CA (Population: 1,469,490)
- Dallas, TX (Population: 1,400,337)
- San Jose, CA (Population: 1,036,242)
Primary Markets (Tier I)
Primary or “gateway markets” refer to the US’s largest housing markets.
New York City is a primary market.
Cities like Los Angeles, Chicago, Houston, Phoenix, Philadelphia, San Antonio, San Diego, Dallas, and San Jose have significant population centers.
Secondary Market (Tier II)
Secondary markets in US cities are not the most populous or dense but have most of the amenities associated with larger cities.
Secondary markets are the mid-sized real estate markets growing at an above-average rate.
These markets are considered high-interest demands or a “hot” markets.
While we commonly define secondary markets as a population of up to 500,000 – some experts may consider cities with up to 1 million people.
If you think about an entire metropolitan area, you can set the population bar even higher.
As a result, housing prices would likely be on a clear uptrend – while the city’s vacancy rate would be relatively low.
Tertiary Markets (Tier III)
Tertiary markets are the third market classification for metro areas.
While there isn’t a standard definition, a tertiary market has fewer than 1 million people.
Are secondary markets the best places to invest in real estate?
While it isn’t a part of most definitions of secondary markets, most are far more affordable than primary markets.
What Is A Secondary Real Estate Market?
The difference between primary, secondary, and tertiary markets is in each size.
Primary markets are the largest, and secondary markets are the mid-sized real estate markets.
Finally, tertiary markets are less populated.
There is no straightforward definition of the two markets for secondary and tertiary markets.
Common Real Estate Questions New Investors Ask About Investing in US Real Estate
Can I Get A Green Card If I Buy A House In The USA?
You can’t get a green card simply by buying a house in the US.
Owning a house doesn’t give you any visa or other immigration benefits.
Under the EB-5 Immigrant Investor Program: you and your immediate family could formally apply for green cards through the minimum investment amount of $1 million.
The minimum investment in a Targeted Employment Area (TEA) is $500,000.
The investment is subject to fulfillment of the United States Citizenship and Immigration Services requirements.
Can I Live In The USA If I buy A House?
Buying a property in the US will not provide you with residential status.
If you are looking for permanent residency in the States: you need to apply for your Green Card by contacting an immigration lawyer.
How Long Can I Stay In The USA If I Own Property?
For a non-resident to remain in the US, you must hold a B-2 visa.
That entitles the holder to stay for a maximum of six months so you can enjoy your property.
Are There Any Restrictions On Foreign Ownership Of Land In The US?
When you buy the property, you own the land.
No restrictions exist on any foreigner owning property and land in the US.
Can A Foreigner Buy Land In The USA?
The USA does not require a person to buy land as a US citizen.
In most states, there are no restrictions at all.
It is a straightforward process for any foreigner to buy land in America.
It is the same process as for US citizens to purchase land in the USA.
54.9 percent of American land under foreign ownership is forestland, 23.6 percent pastureland, and 21.5 percent cropland.
Buying raw land can be an excellent investment if you want to invest in land properly, like a real estate developer.
The land is relatively cheap in the USA as it sprawls out of cities.
Developers in the USA are competitive and build developments outside cities where they get the best prices for materials.
Land investments can produce high returns, passive income, and large profit margins.
Can A Non-US citizen Or A Foreigner Retire In The US?
While some other countries offer foreigners retirement visas, sometimes known as silver cards.
The United States does not have a retirement visa program–and has no current plans to create one.
Now that you have the assurance to start investing in US real estate: let’s look at setting up your business structure.
Noble Sky International Specializes In Helping Foreigners Get Set Up Easily In The US
I WANT NOBLE SKY TO HELP ME GET STARTED TODAY
Chapter 4: A Guide to Setting Up Your Business Structure
An approximate estimate of 21.6 million LLCs has been set up in the US.
As more people tune in to HGTV and YouTube: many enterprising investors become influenced to start a business for their investments.
Now that you have identified investing in US real estate as an exciting opportunity, the next step is to find out how to find financing, resources, and research before starting a business.
If you’re an enterprising investor, this guide will help you develop
- a business strategy
- determine and execute
- for optimal financial profit
Here Are The 8 Steps To Start A Business In The US
Step 1: Write a Business Plan
Step 2: Set Up Your Business
Step 3: Obtain insurance, permits, and licenses.
Step 4: Grow your network.
Step 5: Connect With Contractors & Other Professionals
Step 6: Form a team.
Step 7: Understand The Importance Of Market Research
Step 8: Buy, Renovate, & Sell Or Rent Your First Property
Step 1: Write A Business Plan
A business plan is a key to keeping your business on track.
It should be reasonably in-depth to include data from the real estate market.
- In-depth research
- acquisition process
- rehab or renovation
- staging the property for a Flip
- traditional rentals
- Airbnb rental
Remember, the critical part of a business plan is your profit margins.
As a business owner, list down your competitors, if any.
Knowing the demands will sustain your US real estate business.
Step 2: Set Up Your Business
We start a business to make a difference and keep the business activities running smoothly. As a small business, you can’t afford to be sued.
You are choosing the proper business legal structure to allow you to operate your business legally and securely.
Register your business name, set up a business bank account, and apply for required licenses or permits.
Liability protection is vital for a real estate investment business, as many unforeseen circumstances can go wrong.
An LLC is a business structure in the United States where the owners are not liable for the company’s debts or liabilities.
Essentially, an LLC works as a flow-through entity.
The owner reports income or losses flow-through on their tax returns.
We recommend forming an LLC in Wyoming state.
Wyoming is tax-efficient for a corporate setup.
You only pay Federal taxes – you get to pay lesser taxes and keep more of your profits.
- No state taxes.
- Asset protection and limited liability.
- Members nor managers are not listed in the state.
- Best asset protection laws.
- No citizenship requirements.
- Perpetual life.
- Transferability of ownership.
- Ability to build credit & raise capital.
You can find an agent online or leverage Noble Sky’s Sky Invest Concierge to help register your business.
Step 3: Obtain Insurance, Permits, And Licenses.
Next, let’s look at your business insurance.
Before you can hire employees, you’ll need workers’ compensation, unemployment, and disability insurance.
You must look into general liability and commercial property insurance to protect yourself, your business, and your properties.
Finally, you’ll need proper business licenses and necessary permits to operate your real estate business.
Step 4: Grow Your Network.
You can buy your property as an asset.
You will need an entire crew network of people to get the project off the ground to completion.
As you build your resources, you can learn to start professional networking.
These networks are the relationships you build with family, relatives, friends, neighbors, or even colleagues.
Someone in your network may be connected or involved in real estate investment.
With Noble Sky, you can leverage our vast network of research and resources in the US.
Step 5: Connect With Contractors & Other Professionals
Some investors feel they want to contribute sweat equity to your house-flipping business.
Even if you plan to get hands-on with the renovation, you will need an entire team to help.
You will join a whole team of contractors’ crew, suppliers, professional equipment, and coordination to get the job done.
Being a project manager and making numerous trips to settle construction problems may not be your cup of tea or coffee.
Your valuable time is best spent elsewhere to make more money.
One of the big plus points is having a trusted network.
Our US Team knows the work required to flip a house for profit.
NSI uses a reputable and experienced general contractor who manages the turnkey aspect of the project.
Good local knowledge helps manage county requirements, licenses, and permits for approvals.
Managing budgets and meeting timelines are crucial aspects of the construction process.
We are on the pulse with the US Team to ensure that we don’t have disruption of workers or supplies, unnecessary expenses, or extended timelines cutting our profits.
Over time, you will meet other professionals you’d like to have on your team.
Step 6: Form an A-Team.
You can choose to be a single owner or join other active investors in a project.
Instead of using money lenders to finance a bigger project, active investors can join forces to co-invest together.
Just as a suitable business partner is–having a great work ethic may be more critical than injecting capital.
Aside from local knowledge or connections with realtors, wholesalers, and contractors, consider partnering with Noble Sky: You gain our expertise for in-depth research and market knowledge.
A big plus for an investor in a house-flipping business is a real estate and property ownership background.
Step 7: Understand The Importance Of Market Research
While you can Google to find the information and do your research for free: working with a US Team helps you find niche market sectors.
With market research, you know what buyers are looking for, where they want to buy and how much they’re willing to pay.
A big part of your business plan involves marketing strategies and actionable insights based on the current market conditions.
These include knowing how and where to shop for properties below market value.
A clear indicator you should consider is above-average rates, solid job growth, and a growing population.
With migration into the cities, housing prices are likely to be uptrend with a low vacancy rate for rental properties.
Markets commonly considered secondary markets or secondary cities include these locations.
- Orlando, FL
- Miami, FL
- Kansas City, MO
- St. Louis, MO
- Portland, OR
- Nashville, TN
- Austin, TX
Surprisingly, secondary markets have seen an influx in population growth, as these places have significantly lower living costs.
In the last decade, Austin, TX, experienced population growth of nearly 20%. Charlotte, NC, and Denver, CO, grew by more than 15%.
However, New York City’s growth rate is 1.9%.
Charleston, SC
An example of a clear-cut secondary market is Charleston, South Carolina.
Charleston has a population of just 140,000.
With intense job and population growth and solid home price gains – Charleston satisfies the most widely accepted definitions of a secondary market.
Philadelphia, PA
Other cities like Philadelphia are excellent examples of one of the largest US cities.
While Philadelphia may have a seven-figure population, it is not considered a “hot “market.
Philadelphia lacks both population and home price growth.
The job growth is relatively slow, and the migration population growth is at 0.7 percent.
The COVID-19 pandemic has accelerated the growth of some cities.
As Americans prefer to live in a larger home than they can afford in significant cities, they migrate to secondary markets.
Many corporations have policies in place that allow employees to work remotely.
Tapping into demographic trends points toward growing attractive real estate investment opportunities in secondary markets for real estate investors.
Step 8: Buy, Renovate, & Sell Or Rent Your First Property
You can check county records or Google Maps for a potential property’s location.
You can see the photos online, but these may not be recent property photos.
For NSI, we send our scouts to drive by to view and estimate the renovation cost.
We are prudent in ensuring all properties meet our criteria of making a minimum 30% profit.
Buying the investment property with cash means you will not incur more overhead with a monthly payment for a loan.
After Purchase, you will want to start your rehab or renovation works ASAP.
Once rehab is completed, we stage the property to make a Quick Sale.
We will work with Realtor to provide the marketing and listing of the property.
Our strategy is to sell fast instead of holding for the highest price.
That way, you can use your profits to reinvest in other properties.
Remember that with passing days on the market – your property looks stale.
NO. 1 MISTAKE OF PROPERTY INVESTING – Buy A Property Without Research!
Chapter 5: Residential Real Estate Investing
For beginner investors, many start with Residential Real Estate Investing.
Whether you lease out an unoccupied bedroom or a new flat: you create a Cash Flow income while your property gains capital appreciation.
Real estate investors make money primarily through residential and Airbnb rental revenue.
Investors with oversized pockets go for commercial properties.
They make rental incomes and profits earned by business activities on the retail property.
Real estate investing benefits include a Cash Flow income, a passive retirement salary, and portfolio diversification.
Investing with Noble Sky International offers huge leverage.
You can co-invest with our community of investors.
With a bigger capital size, you can diversify into US real estate.
From a business point of view, you gain better tax advantages.
In Asia, the investment ideal may be a condo with a pool and full gym facilities above a shopping mall with cafes and facilities.
In the United States, the reverse is true.
Eighty percent of American people choose to live in a single-family home.
Seven in ten Americans do.
For the sum of a down payment for a city condo – Asian investors can buy a single-family home in the US.
Not only that, but the great news is that when you purchase an investment property in the US, you OWN the land too.
There is no such thing as a leasehold in the USA.
When you buy a property, the land your property sits on is yours as long as you own the house.
Chapter 6: Co-investment
Many of us are accustomed to buying a property with Conventional Leverage using Bank Mortgages.
Noble Sky International offers the Unconventional Leverage strategy.
What Is Unconventional Leverage?
At its most basic, Unconventional Leverage is investing with other similar investors. It is also called co-investment.
Every Investor invests an agreed-upon amount.
The Profit / Income is proportional to your investment proportion by percentage.
Noble Sky International serves as the neutral manager to administer the entire process.
Our top real estate investment strategy is investing only in cash.
We get to leverage the larger investor community through co-investing opportunities.
Without a bank mortgage, you are the OWNER – not the bank when you purchase the house.
You put your assets in a much safer position since no banks are involved.
With a mortgage, the banks’ debts will prioritize any other claims over YOU, the property owner.
Without a bank loan to service, there is no risk of foreclosures
With this strategy, you can start with small capital and enjoy the benefits of owning profitable properties in the US.
NSI offers a partnership opportunity for investors who lack sufficient cash to invest in bigger deals to maximize profits.
How Does Co-investment Work?
Co-investing works by the Capital Investment you commit.
You can be a sole investor, a married couple, a family, or a part of the greater community of Noble Sky Internationals’ investors.
When you make a profit, it is from your % share of the investment capital by projects.
What Is The Minimum Investment Required For Investing?
You can do a Flip or a Rental project or do both.
As part of the community of investors, you can start with an affordable Capital Investment, say a minimum of $10,000.
Based on the above table, this gives you a 5% share of the profits.
Let’s look at some actual figures from Noble Sky’s Case Studies
Flip Property LLC
Sale Price: $215,000, Equity Gained: $126,000, Flip ROI: 95.45%
Noble Sky International is the leading convener of US real estate investment for co-investment in auction properties.
We secure the rights to a property transaction for the community of investors to fund the deals fully.
Chapter 7: Corporate Taxes
“Our new Constitution is now established and has an appearance that promises permanency, but in this world, nothing can be said to be certain except death and taxes.”
The source of the world-famous quote was a letter from Ben Franklin to French scientist Jean-Baptiste Leroy in 1789.
We’ve all heard of the quote (or misquote?), which has cemented a place in popular culture.
The quote means that death and taxes are loathed but unavoidable – no matter who or where you are with US citizens.
Businesses pay property taxes on the assessed value of that property in the same way as individual owners.
If your company owns real property, you must pay property tax on this property.
What are the tax advantages of real estate investments?
Real estate investments can offer beneficial tax advantages.
Like most investments, tax consequences depend on several factors, including the investment vehicle.
Taxation amounts and timing for each Investor are affected by several factors.
The factors include the amount and type of return earned, duration, investment vehicle, and other factors.
For that reason, it’s essential to consult your tax advisor concerning taxes for your specific investments.
On a basic level, any income and capital gains earned from appreciation will probably be taxed at some point.
For example, since 2018, income earned and distributed by REITs and real estate mutual funds can qualify for up to a 20% tax deduction.
Under the Tax Cuts and Jobs Acts, the pass-through structure of these investment vehicles allows their investors to claim the deduction on qualifying business income.
In Asia, investing in real estate does not require any entity.
Some investors even begin a real estate investment simply in their name.
Any foreigner can buy and own property in the United States.
The USA has no laws or restrictions that prevent a foreigner from owning or buying a home in America.
Buying a house in America as a non-U.S. citizen is simple if you plan to pay in cash or a lump sum (from the money saved up).
If you’re not in the financial position to purchase a home with cash – you’ll need to get a mortgage loan to buy the property.
For a foreigner, the process can become more complex.
Your ability to get a mortgage as a non-U.S. citizen depends on your residency status.
If you plan to buy a home but have no intention of moving to the US, you may only qualify for a foreign national loan.
Foreign national loans have a higher down payment and a higher interest rate.
You will also need to have an Individual Taxpayer Identification Number (INTN).
From A Tax Perspective, Which Is Better For Doing This: US Citizens or Non-Citizens?
There are different tax liabilities between the US and non-US Citizens.
We recommend you set up a business entity to invest in US real estate as a business for tax purposes.
NSI helps our investors take care of setting up a business entity in the State of Wyoming.
There is no state tax in Wyoming.
We will apply legal tax reduction strategies so you end up paying lower taxes and earning more.
Why Wyoming State?
Wyoming is tax-efficient for a corporate setup with only Federal taxes incurred, which means you get to pay lesser taxes and keep more of your profits.
- No state taxes.
- Asset protection and limited liability.
- Members nor managers are not listed with the state.
- Best asset protection laws.
- No citizenship requirements.
- Perpetual life.
- Transferability of ownership.
- Ability to build credit & raise capital.
LLC VS Incorporation: Which Should I Choose?
The decision to form either a limited liability company (LLC) or a corporation (Inc.) depends on the type of business you create.
Both types of entities have the significant legal advantage of helping to protect assets from creditors and providing an extra layer of protection against legal liability.
Another important consideration is the tax consequences of forming the business entity.
What Type Of Entity Do You Use For Flipping Properties?
For the Flipping of properties, the entity that will ultimately benefit from the sale’s income will be a C Corporation.
Income earned and profits on flipped houses are treated as ordinary income.
Since flipping activity is not considered a long-term investment or capital gains, it is wiser to use the correct entity – a C Corporation.
Non-US citizens cannot form an S-Corporation, so the better option is to open a C Corporation.
The IRS treats profits from Flipping Houses as an ordinary business, not an investment.
So we must use the correct entity for flipping activities.
What Type Of Entity Do You Use For Renting Properties?
Owning rental properties has many tax advantages, one of which is that there are depreciation losses on paper that the Investor can claim.
We use an LLC with the income or losses “flow-through” to the beneficial owner to take advantage of this benefit.
The beneficial owner will report the income or losses on their tax returns.
Using an LLC to own rental properties is better for liability protection and more tax-efficient since it will not trigger double taxation as a C Corporation would.
Some of the questions you may have included are the following:
US Citizens Living Abroad: Do You Have To Pay Taxes?
If you are an American living abroad as a US citizen, you must file a US federal tax return and pay US taxes on your worldwide income – no matter where you live.
In other words, you are subject to the same rules regarding income taxation as fellow Americans residing stateside.
In the case of foreign investors, “How does that affect me?” you might ask.
Some of the questions we usually receive from our investors are listed below.
Do I Need To Pay Taxes In Singapore?
As your own company (LLC) is incorporated in the US, you will pay corporate taxes to the IRS – not the Inland Revenue Authority of Singapore.
For Taxation Purposes, Is There A Difference Between A Non-Resident US Investor And A US PR Investor?
US citizens have an Employer Identification Number (EIN) and pay personal taxes.
As a foreigner, you will invest as a business entity and pay corporate taxes.
What About The Impact Of The US-SG Tax Treaty On Me With This Venture?
There is no US-SG Tax Treaty.
How Do Real Estate Investments Earn Money?
Real estate can earn money over the short and long term through income and appreciation.
Investing in the US housing market can be a very lucrative venture.
The top four potentials because you would want to invest in US real estate are:
- Relative Stability
- Low Property Valuations
- Positive Cash Flow
- Favorable Debt Terms
Relative Stability
The United States of America’s stability, economic growth, and regulatory environment make this one of the best reasons to invest in US real estate as a foreigner.
Foreigners or non-citizens investing in US real estate don’t need a green card to buy an investment property in their name.
With such friendly conditions unheard of anywhere, a foreigner can easily buy a rental property here.
In addition, the American government doesn’t charge any extra stamp duties or restrict a foreign buyer from owning multiple US properties.
Favorable Debt Terms
In America, you can get a long-term, fixed-rate mortgage.
US lenders provide the convenience of locking in a low-interest rate.
You can start from 10 to 30 years, with amortization schedules for anywhere from 15 to 40 years.
A long-term, fixed-rate mortgage Stateside is far from an international model where short-term, adjustable-rate loans are the rule.
Fannie and Freddie are two of the largest financial institutions in the world and are responsible for a combined $5 trillion in mortgage assets.
Agency lenders, like these two mortgage giants, purchase home loans made by private firms.
They repackage those loans into mortgage-backed securities and guarantee the timely payment of principal and interest on those securities to outside investors.
Lenders have an added incentive to offer safe and sustainable long-term, fixed-rate mortgages as they know Fannie and Freddie will probably purchase them.
Subprime mortgages are mortgages granted to less qualified buyers with low credit scores or uncertain income sources.
Subprime mortgages are not illegal or even inherently unhealthy.
But they can be dangerous to the housing market when they originate in large numbers.
With the US interest rates currently at historic lows, this kind of leverage is more attractive than ever to foreign investors.
Low Property Valuations
The price of homes to an average price per square foot determines your property’s valuation.
For instance, in metropolitan cities like Singapore, Jakarta, and Kuala Lumpur – the average price per square foot for a downtown condo is much higher than in the USA.
As of June 2020, the average listing price of a condo in Singapore was $ 428,000 or $416 per square foot.
According to Statista data, the average price per square foot in new single-family houses US from 2000 to 2020 was $122.12 per square foot of floor space.
Compared to the prices you pay as a foreigner in your home city, a cost of $200 per square foot appears “relatively cheaper” for a high-end property US property.
A London investor faces prices of thousands of pounds per square foot.
By contrast, European and Asian property investors must pay through the nose for this stability.
In comparison, the US is one of the most stable markets, with homes in the country’s mid-west states being the least expensive with the lowest barrier to entry.
Foreign investors can look for a comparative bargain on a premium property in markets like New York, San Francisco, and Los Angeles for a premium property.
Positive Cash Flow
Most people think that investing in real estate is an easy way to get rich in no time.
Positive cash flow income means you bring in more money than you spend on your income properties.
The first two points already game-changers on the world property stage are favorable debt and low prices.
They create the conditions where positive cash flow is possible and yield about four or five percent cash on cash return each year.
With a low purchase price compared to the market rent, having a monthly cash surplus in the US is relatively easy.
American investors have the potential for a significant cash flow, even with their highly leveraged real estate assets.
In “hot” real estate markets in Europe and Asia, investors settle for a minimal or negative cash flow to wait for capital appreciation.
The potential for stability, cash flow, and even appreciation contributes heavily to foreign demand for US real estate.
How Long Do Real Estate Investments Last?
Real estate is generally a long-term investment with the highest earning potential, typically over several years.
Real estate is usually not a liquid investment.
In the private market, properties are slow to sell.
But it can also mitigate the volatility of assets with higher liquidity, like publicly traded stocks and bonds.
The holding period or time horizon for real estate is generally several years.
Institutional investors hold commercial real estate for an average of 7.6 years.
Direct investors who own residential investment properties may hold them even longer.
In Summary: Key Reasons For Investing In US Real Estate
- Cash Flow
- Tax Breaks and Deductions
- Appreciation
- Build Equity and Wealth
- Portfolio Diversification
- Real Estate Leverage
- Competitive Risk-Adjusted Returns
- Inflation Hedge
- Real Estate Investment Trusts (REITs)
Your Next Step:
At Noble Sky International, we advise investors to expect a holding period of at least five years to see the profits double up.
Should you have any questions, you may also drop us a WhatsApp or a Call @ https://wme/6594220100
Noble Sky International Specializes In Helping Foreigners Get Set Up Easily In The US
I WANT NOBLE SKY TO HELP ME GET STARTED TODAY
Resource:
Why Foreign Investors Still Love U.S. Real Estate
Foreign Investment in U.S. Homes Continues to Decline
International Transactions in US Residential Real Estate
What Are Secondary Markets in Real Estate?
DISCLAIMERS: Any information or advice available on the Noble Sky International website is intended for educational and general guidance only. Noble Sky Core LLC and Noble Sky Institute Pte. Ltd. shall not be liable for any direct, incidental, consequential, indirect, or punitive damages arising from accessing or using any of the content available on this channel. Consult a financial advisor or other wealth management professional before you make investments of any kind.
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